Global Governance: Adjustment or Reform of the International Monetary System?

Abstract

Global public goods and the contrast to global public bads require a dramatic change in the international monetary system, enforcement capacity, democratic legitimation, the return to regionalism and multilateralism. Pending the emergence of a more equitable global reserve and payments system, an increased use of the Special Drawing Rights, channeled through Multilateral Development Banks, may help managing the transition towards the provision of such global public goods. This would also provide a guidance for the reduction of Central Banks’ balance sheets, the financialization of the economy and an increase of real investment, thus anchoring the whole international economy to a less vulnerable and volatile monetary structure.